Discuss the strategically significant differences between a not-for-profit organization and a for-profit corporation. What are the features of not-for-profit organizations that make it more difficult for them to carry out strategic planning?

Question

Quizplus · Accepted Answer

The Answer is

\bullet

Most NFP organizations are not subject to competitive pressures that compel proficient strategic planning if they are to survive. An health care exception is NFP hospitals and health plans that often compete as though they were profit-driven, particularly if they face FP rivals.

\bullet

The funding sources for NFP organizations are generally not as demanding of high performance as the equity investors in FP businesses. On the other hand, FP shareholders are likely to be less interested in the specific mission of the organization as long as the returns on their investments are acceptable.

\bullet

In many cases, the funding for NFP organizations comes from sources that are not the direct beneficiaries of their services (e.g., individual donors, charitable foundations, and government grants), whose interests and demands can change unpredictably from one year to the next.

\bullet

Financial supporters of NFP organizations typically accept a longer-term perspective on their operations than do the shareholders in FP corporations. Such a perspective facilitates strategic thinking and planning.

\bullet

It is usually true that FP corporations have access to capital from more sources and in greater amounts than do NGP organizations.

\bullet

Due to their strong charitable mission orientation and comparatively lower salaries, NFP managers may have less experience and interest in the business aspects of their organizations, including the planning and management of strategies.

\bullet

It often is more difficult for mission-based NFP entities to define good objective criteria for demonstrating their performance and progress to their funding sources.

Discuss the Strategically Significant Differences Between a Not-For-Profit Organization and a For-Profit